Physical gold demand was subdued in major Asian hubs last week on account of the Lunar New Year holidays, with growing fears the coronavirus outbreak in China could further dampen activity, reports Reuters.
China, the world’s biggest gold consumer, is ramping up measures to contain a virus that has killed 26 people, suspending public transport in 10 cities, shutting temples over the Lunar New Year and even closing the Forbidden City and part of the Great Wall.
International spot gold prices have risen about 0.1% so far this week, mostly holding above the key $1,550 per ounce level. Premium of $2-$5 an ounce were charged over benchmark rates in China, versus $5-$6 in the previous week.
In Hong Kong, gold was sold at anywhere between a premium of up to $0.1 an ounce to on par with the benchmark, versus premiums of $0.40-$0.60 last week.
In India, dealers offered discounts of up to $11 an ounce over official domestic prices, which includes a 12.5% import tax and 3% sales tax, unchanged from the last week.
Traders in India agree that retail demand is weak. The market is trading at a discount, but still jewellers are reluctant to make big purchases. Indian gold futures were around 40,000 rupees ($563) per 10 grams on Friday, close to a record high of 41,293 rupees.
Gold and jewellery traders in India see a silver lining in trge ensuing wedding season. Wedding season demand could start picking up in coming weeks if prices correct a bit, traders aver.
Dealers in India are also waiting for the union budget in February before making large purchases.